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The Political Economy Of Food Standard Determination: International Evidence From Maximum Residue Limits

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  • Beghin, John C.
  • Li, Yuan

Abstract

We build a parsimonious partial equilibrium political-economy model for a tradable good associated with a negative externality mitigated by a single quality standard. The policy-maker solves for the standard that maximizes a weighted sum of welfare measures reflecting rent-seeking activities. Derived comparative statics are ambiguous but provide useful guidance for the econometric specification. We empirically implement the derived reduced form to econometrically investigate the determinants of protectionism in maximum residue limits affecting food trade among a large number of countries. Protectionism is measured using an index of stringency of MRLs relative to Codex international standards as in Li and Beghin (2012). Higher-income countries tend to protect their domestic market and their consumers’ health more than lower income countries do; MRL stringency and tariffs are substitute policy instruments; the impact of democratization on strictness of MRLs shows a inverted u-shaped pattern; and the quality of governmental institutions increases MRL protection. �

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 36181.

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Date of creation: 08 May 2013
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Handle: RePEc:isu:genres:36181

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Keywords: political economy; NTMs; Non-tariff measures; MRL; endogenous; NTBs; food trade; maximum residue limits;

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  1. Li, Yuan & Beghin, John C., 2013. "Protectionism Indices for Non-Tariff Measures: An Application to Maximum Residue Levels," Working Papers 142503, International Agricultural Trade Research Consortium.
  2. Stéphan Marette & John Beghin, 2010. "Are Standards Always Protectionist?," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 179-192, 02.
  3. Anderson, Kym & Martin, William J., 2007. "Distortions to Agricultural Incentives in Asia," Agricultural Distortions Working Paper 48557, World Bank.
  4. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  5. Swinnen, Johan F.M. & Vandemoortele, Thijs, 2008. "The Political Economy of Nutrition and Health Standards in Food Markets," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44364, European Association of Agricultural Economists.
  6. Beghin, John C. & Foster, William E., 1992. "Political Criterion Functions and the Analysis of Wealth Transfers," Staff General Research Papers 1568, Iowa State University, Department of Economics.
  7. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
  8. De Gorter, Harry & Swinnen, Johan, 2002. "Political economy of agricultural policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 36, pages 1893-1943 Elsevier.
  9. Cropper, Maureen L. & William N. Evans & Stephen J. Berard & Maria M. Ducla-Soares & Paul R. Portney, 1992. "The Determinants of Pesticide Regulation: A Statistical Analysis of EPA Decision Making," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 175-97, February.
  10. Beghin, John C & Kherallah, Mylene, 1994. "Political Institutions and International Patterns of Agricultural Protection," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 482-89, August.
  11. Fischer, Ronald & Serra, Pablo, 2000. "Standards and protection," Journal of International Economics, Elsevier, vol. 52(2), pages 377-400, December.
  12. Katia Berti & Rod Falvey, . "Does Trade Weaken product Quality Standards?," Discussion Papers 11/24, University of Nottingham, GEP.
  13. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
  14. Alessandro Olper, 2001. "Determinants of Agricultural Protection: The Role of Democracy and Institutional Setting Alessandro Olper," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(2), pages 75-92.
  15. Johan F.M. Swinnen & Thijs Vandemoortele, 2009. "Are food safety standards different from other food standards? A political economy perspective," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(4), pages 507-523, December.
  16. Alessandro Olper & Jan Falkowski & Johan Swinnen, 2009. "Political Reforms and Public Policies: Evidence from Agricultural Protection," LICOS Discussion Papers 25109, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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